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Vikas Oberoi, Chairman and Managing Director, Oberoi Realty, is of the opinion that realty majors can look at affordable housing as a viable option only if the Government is able to provide land at cheaper rates.
Seeking government intervention to incentivise affordable housing is not the only thing plaguing Oberoi, who is also looking to expand the company’s portfolio beyond their core market of Mumbai and Maharashtra. With a kitty of Rs 200 crore, Oberoi plans to enter the Delhi- NCR market. Excerpts:
We have seen a price hike in your projects in the previous quarter. So, what can we expect this fiscal?
Market forces decide whether we can increase prices. If we see a continuous demand for our projects we will increase our prices, because the replacement cost of the land, additional costs such as fungible FSI (floor space index) premium and so on, need to be taken into account.
We feel we can increase prices in certain pockets, especially development of social infrastructure such as the construction of malls, hotels and schools along with residential apartments, which has made people willing to pay a premium. This is not a trend across Mumbai, but only in specific locations, where infrastructure development has happened. Our project in Goregaon (Mumbai suburb) is one such example where we could increase prices to an extent.
What are your plans to enter new segments such as affordable housing?
We are looking at it, but affordable housing can only be successful if land is made available to us at an affordable price. That is where we need to see the Government taking an initiative. If that happens, then we will tap that market, because it is possible to build at a particular cost, looking at this segment. There is no rocket science to make a house cheaper.
What is your strategy in entering new markets such as NCR?
We are looking to enter new markets such as NCR, Hyderabad and Bangalore with a small investment. We will look how it pans out before taking a bigger call. We have been scouting for property in NCR, and are in talks with developers and landowners, but we want to be sure we are able to work there and our pattern of working is accepted by the new market.
Meanwhile, we would continue to look at opportunities where it makes business sense, whether it is in Mumbai or satellite areas of Mumbai such as Thane or Pune. In NCR, we are looking to invest about Rs 150-Rs 200 crore for a residential project, which could be a joint venture partnership with an existing land owner.
What is the update on your land bank front?
As a real estate company, we have never had a land bank story. We have enough land at a stretch for the next four to five years. We don’t believe in creating a land bank for the next 20 years. In a high interest regime, I don’t think it is sensible to borrow and buy land. That is our strategy.
How do you plan to divest promoters’ stake to meet SEBI’s minimum public shareholding this year?
The company is not in need of money, and we will focus on the big picture of keeping the investor happy. We are contemplating several routes including offer for sale, rights issue where I allow my existing investors to buy or put a divested stake into the company.
What is the status of completion of your two big projects that are still awaiting launch?
The Worli project in Mumbai is in progress and continue to work on the documentation. We have an operator on board and will start selling aggressively once we are able to announce the operator officially.
For the Mulund project, also in Mumbai, we are awaiting the Ministry of Environment and Forests no-objection certificate, which is taking longer than we thought.
Once it starts, we will have an additional three million square feet added to our supply. Both these projects could see an official launch around September.
What are your cash deployment plans with about Rs 1,500 crore?
We don’t have any definite plans and we won’t take a call till we find the right project. This is like our reserve ammunition and you don’t fire it till you have an enemy in front of you.
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